The gap in income between the wealthiest Americans and all others has grown considerably in recent decades. According to a new report released by the Center on Budget and Policy Priorities, between 1979 and 2006 the income gap between the rich and the poor tripled. A growing body of data suggests greater income concentration at the top than at any time since 1929.



Regressive federal tax polices are partially responsible for this growing inequality. The report cites that legislation enacted under the Bush administration have provided tax payers with about 1.7 trillion in tax cuts through 2008. These large tax reductions have made the distribution of after-tax income more unequal. In fact, high-income households received by far the largest tax cuts—not only in dollar terms but also as a percentage of income—the tax cuts have increased the concentration of after-tax income at the top of the spectrum.

State leaders can begin to address the widening income and wealth gap by:

• Creating state funding for Individual Development Accounts, a successful program that provides incentives for low-income families to save and build wealth.

• Establishing a State Earned Income Tax Credit (EITC) which supplements earnings of low-wage workers by reducing their tax burden.

• Funding microenterprise support programs that can provide entrepreneurs with skills necessary to successfully establish a microenterprise or small business.

• Eliminating asset limits in public benefit programs. States have full discretion to eliminate the asset test that families are required to undergo in order to qualify for public assistance like CalWORKs, Food Stamps, Medical and more.

The widening income gap threatens the promise of the American Dream, the belief that if you work hard and play by the rules then you can move up the economic ladder and live the American Dream of owning a home and enjoying financial security. If the United States is to remain the land of opportunity then policy makers must consider these policy solutions.

To download the report click here: Income Gaps Hit Record Levels In 2006, New Data Show Rich-Poor Gap Tripled Between 1979 and 2006